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Saraswati Shiksha Samiti, C/o Saraswati Sr. Sec. School Versus Commissioner of Income-tax, Rohtak.

2016 (11) TMI 1361 - ITAT DELHI

Grant of registration u/s. 12A and approval u/s. 80G denial - denial of claim holding that the aims and objects of the Society are not charitable and activities conducted by the appellant are not genuine - Held that:- From the analysis of the financial statements, we find that the nominal surplus amounts shown above remained with the society and not distributed amongst its. The appellant society has charged fees from students, but the same has been utilized for running of school for education pu .....

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of the case, we direct the ld. CIT to grant registration u/s. 12A and approval u/s. 80G of the Act as prayed for. - ITA Nos. 1330 & 1331/Del./2014 - Dated:- 19-9-2016 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. K. Sampath, Advocate and Sh. V. Raja Kumar, Advocate For The Respondent : Sh. B. Ramanjaneyula, Sr. DR ORDER Per L.P. Sahu, Accountant Member: These are two appeals filed by the assessee against the orders of the Commissioner of Income .....

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ce and brevity. 3. The brief facts of the case are that the appellant filed applications on 23.07.2013 in Form No. 10A and 10G for seeking registration u/s. 12A and 80G of the Act respectively along with copy of Society Registration certificate dated 01.07.1998 issued by Registrar of Firms & Societies, copy of memorandum of society, income & expenditure account, balance sheet along with audit reports in form No. 10B for F.Y. 2009-10 to 2011-12. Notices were issued for hearing. A report w .....

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; as given in the Income Tax Act, 1961 is reproduced below :- "Charitable purpose includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places of objects of artistic or historic interest,] and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the .....

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tion 12AA of the Income Tax Act, 1961. The provisions of sec 11 and 12 do not envisage that a charitable institution shall provide charity by charging fees from public at large. The fees received are outside the scope of sec 11 and 12 and shall, therefore, be taxable. Fees imply direct involvement of consideration for the services rendered. Fees can not be voluntary and are, therefore, taxable under the head profit and gains of the business or profession. The charging of fee is also in violation .....

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is never expected from such a educational society which is interested in approval for registration u/s 12AA of the Income Tax Act, 1961. The provisions of sec 11 and 12 do not envisage that a charitable institution shall provide charity by charging fees from public. The fee received is outside the scope of sec 11 and 12 and shall, therefore, be taxable. Fees imply direct involvement of consideration for the service rendered. Fees cannot be voluntary and are, therefore, taxable under the head pr .....

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aims/objects and terms of memorandum are of the charitable nature, nor are there any activities which may be put to a test of genuineness. Consequently, the request of the applicant society for registration u/s 12AA of the Income Tax Act cannot be acceded to and the application in form 10A is, therefore, rejected accordingly u/s 12AA(l)(b)(ii)/250 of the Income Tax Act, 1961. 4. During the course of hearing, the ld. AR of the assessee contended that the only objection of the ld. CIT to reject t .....

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r alia relied on the decision of ITAT, Lucknow Bench in the case of St. Don Bosco Educational Society vs. CIT, (2004) 84 TTJ 805 for the proposition that mere charging of high fees is no ground for rejecting the registration application. It was submitted that aims and objects of the assessee society and its activities are charitable qualifying for the registration. Several other decisions have also been relied upon on the issue. 5. The ld. DR, on the other hand, relied on the order of the ld. CI .....

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d business entity and not a charitable institute, is based only on the ground that the assessee-society charged fees from the students. The ld. CIT has failed to throw any light on the aims and objects of the society and to examine whether the activities carried out by the assessee-society are to achieve such aims and objects as per its memorandum. Simply because the assessee charged fee from students, in our opinion, does not go to suggest refusal of registration to the assessee-society as held .....

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